Amazon's Snafu Rattles Customers

By

Greg Bensinger

Updated Dec. 27, 2012 12:51 a.m. ET

Amazon.com
Inc.
's latest technical glitch—interrupting service for
Netflix
Inc.
and others—is causing some companies to rethink their reliance on the Seattle-based company for the bulk of their Web-computing needs.

Millions of Netflix customers from Canada to Brazil were unable to stream video on Christmas Eve after technical issues in Amazon's servers in Northern Virginia felled service from Dec. 24 through the following morning. Netflix said the outage lasted nearly half a day for some of its users, and stemmed from problems with Amazon's Web Services unit, or AWS, which manages online operations for many companies.

Earlier

The Amazon unit said it identified and fixed technical problems at its operations in Northern Virginia. They affected other firms besides Netflix, including Scope, a San Francisco social-media company, and software company Heroku Inc.

Amazon hasn't offered an explanation for the source of the outage, which didn't affect its own online operations. A spokeswoman said Amazon would release a full summary of the outage in the coming days.

"Our goal remains to make our operational performance indistinguishable from perfect, and we know we have more work to do," she said. "Our operational performance has been quite strong over the last seven years and one of the key reasons we've grown as quickly as we have."

Scope Chief Executive
Amit Kumar
said he had been considering alternatives to AWS after the most recent outage.

"This does seem to be happening on a fairly consistent basis," said Mr. Kumar, whose engineers devised an AWS workaround on Christmas Eve. "I'd like to spread our risk out to prevent this from happening again and I am looking into what options we have."

The online retailer, which offers a video-streaming service that competes against Netflix, has placed an intense focus on the Web-services unit lately. Last month it hosted a three-day conference in Las Vegas to promote AWS that featured a talk by
Jeff Bezos
,
Amazon's chief executive, as well as parties and developer events.

The division has been growing rapidly as more companies seek to avoid the expense of operating their own servers. Baird Equity Research estimates AWS will account for $1.5 billion in revenue this year, about triple the result in 2010, and will reach $3 billion within two years. Amazon doesn't break out revenue for AWS and won't say if it is profitable.

AWS outages earlier this year brought down other prominent websites for several hours, including Pinterest and Foursquare, as well as Netflix. Others weren't affected, including Amazon's own streaming service.

One reason is that some companies, including Netflix, use AWS servers that are dependent on traffic routers in only one location in the Americas. A failure disrupting one of those locations can bring down all of a customer's operations, so some companies make use of facilities in different states. As a safeguard, AWS also operates multiple data centers at individual sites to help provide redundant capability, but it said that services designed to funnel traffic among them temporarily failed in Northern Virginia.

During the Christmas Eve Netflix outage, Twitter and
Facebook
were abuzz with speculation about why Amazon's competing Prime streaming movie service was still functioning. Amazon said it wasn't using the failed service at the time for its own streaming service, which was unaffected.

Rob Bernshteyn,
chief of software company Coupa, said he uses two AWS operations to help prevent major outages.

"It's a little bit more expensive, but it's worth it," said Mr. Bernshteyn, whose firm has used AWS since 2007. "We have to spread the risk out."

A spokesman for Netflix, which is based in Los Gatos, Calif., said it was in discussions with Amazon about how to prevent future recurrences. "We are investigating what happened," he said.

Netflix has said it relies on AWS for 95% of its computation and cloud-storage needs. Chief Executive
Reed Hastings
spoke at the AWS event in Las Vegas, and stated that Netflix will be almost entirely dependent on Amazon by the end of 2013. "It's worked out great for us," said Mr. Hastings at the conference.

But
Manish Chandra,
the CEO of shopping app Poshmark, said he was hoping for an explanation from Amazon, even though his company wasn't affected.

"Potentially in the next year or so, we may look at other providers," said Mr. Chandra, adding that he had been "happy" with his AWS experience to date.

"This is a pretty serious thing to have it go down and there's no way Amazon could reimburse us for lost sales if it did," Mr. Chandra said. "I've definitely been thinking more about it in the last few days," said Mr. Chandra.

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